When tax season rolls around, many small business owners are unsure how to proceed. Changing tax laws, complex forms and varying business models can make this process feel overwhelming. To help you navigate these waters, Accounting & Tax Professionals, PLC offers the following FAQs. If you have any additional questions, don’t hesitate to contact our experienced staff for tax service in Des Moines, IA.
What records do I need?
Before you begin, you must gather all your business records. You’ll need all earnings and expenses for the year. A good way to keep track of all of these numbers is to use a spreadsheet or other computer program to record items throughout the year. When it’s time to file, you can simply pull up your program rather than sort through a shoebox full of receipts.
What forms should I complete?
The answer to this question depends on the type of business you operate. Regardless of the type, you must report business earnings to the IRS and pay taxes, but the specific form you use depends on ownership. If you run your business as a sole proprietorship, you can report all of your business income on a Schedule C attachment to your personal income tax return. If your business is an LLC and you are the sole owner, you can still use the Schedule C attachment. If your business is a corporation or you treat your LLC as a corporation, you must prepare a separate corporate tax return using Form 1120.
How do I complete the forms?
Once you have the proper forms in front of you, you can proceed with completing the required paperwork for tax service in Des Moines, IA. A Schedule C is a two-page form that simply lists all your expenses you can claim. Add up your expenses, then subtract this total from your business earnings. This will give you your net profit or loss. Transfer this number (hopefully a profit!) to your personal income tax form to include with all your other personal income tax items.
If you use a Form 1120, the process is slightly different. You still calculate your business income in the same manner, but you must provide more details on the form. For small businesses, these details might not always apply. Also, a Form 1120 will be separate from your personal income tax return.
What are the deadlines for filing?
April 15 is typically the deadline for filing taxes. However, this can change depending on the type of filing you choose. If you use a Schedule C, this does not fall under separate deadlines. The April 15 date is still accurate. If you file a Form 1120 as a C-Corp, you must file by the 15th day of the fourth month following the close of the tax year. For most businesses, this is still April 15. If you file as an S-Corp, using a Form 1120S, you must file by the 15th day of the third month following the close of the tax year. In this case, this usually falls on March 15. Remember, a Form 1120 cannot be sent to the IRS with your personal income tax return. It is a separate filing.
As the premier tax service in Des Moines, IA, Accounting & Tax Professionals, PLC is ready to assist you. Simply contact our experienced staff with any additional questions.